Agaricus blazei is an immensely popular edible 'medicinal mushroom' in Japan, mainly due to traditional beliefs that it has antitumour properties, and the ability to stimulate the immune system. The majority of scientific research carried out on A. blazei has demonstrated that polysaccharides extracted from mushrooms fruiting bodies are the active agents for the purported anticancer properties. Limited research has been undertaken with regards to liquid-cultured mycelium and liquid culture filtrates of A. blazei and this investigation involved screening these products for novel medicinal properties. The growth of the fungus was examined on solid agar for the propagation of mycelium which was used for inoculation of liquid cultures. Optimal fungal storage conditions were also determined. The optimum growth temperature and pH of A. blazei on yeast malt agar were 28-29 °C and pH 5-6, respectively. Storage of mycelial plugs at -80°C in 10% glycerol was found to maintain viability of the fungus for up to 36 months. Subsequent growth trials in liquid media found that a temperature of 30°C over a pH range of 4-8 were optimal for mycelial growth. Glucose as a carbohydrate source produced the most mycelium, while sucrose was most favourable for exopolysaccharide production. The exopolysaccharides produced were identified as mannan-protein complexes. Organic solvent extracts of liquid-cultured mycelia were examined, and antibacterial activity was identified against Branhamella cattarhalis and some Gram-positive bacteria, particularly for dichloromethane and ethyl acetate extracts. In vitro cytotoxic activity was observed against cervical cancer and lymphoma cell lines, particularly for hexane and dichloromethane extracts. Protein extracts of Agaricus blazei liquid-cultured mycelium were found to have antiviral effect against simian rotavirus, although the cause of the observed effect was likely due to the presence of a trypsin inhibitor in the extract. Cytotoxic activity of the protein extract was also identified against lymphoma cells in vitro. Exopolysaccharides from liquid culture filtrate of A. blazei did not have an effect on rotavirus, but had a marked cytotoxic effect on lymphoma cells, and to a lesser extent of cervical cancer cells. Thus, the cytotoxic effect was found to be specific for tumour cells.